Discounts, control over information key drivers for telematics programs

Half of consumers are likely to sign up for a usage-based insurance program that would provide at least a 10% discount, while 36% would actually change carriers for that discount, according to new research from LexisNexis Risk Solutions.

One in three consumers is aware of UBI programs or telematics, showing a rise in awareness over the past three years, according to the company’s study, based on a web survey of 2,072 residents in the United States conducted by an independent firm in March.

That’s up from 10% knowing about such programs in 2010, although 25% this year said they weren’t aware of UBI.

Its research also suggests that 61% of consumers are also more likely to accept telematics programs if their insurer offers a trial period for three months. Even more (72%) are likely to accept a program if an insurer offers an automatic discount for 10% for the first six months.

About a third of consumers would also be likely to use a smartphone for collecting and transmitting telematics data, the study results suggest.

Being able to opt out of a program without penalty, having control over what information is provided, and having information on a child’s driving behaviour also ranked as top drivers for UBI program acceptance, according to the report.

“While UBI continues to become more mainstream, many consumers also find the use of their smartphone in UBI appealing,” noted Ash Hassib, senior vice president and general manager for auto insurance at LexisNexis.

“For insurers, this creates an opportunity to offer programs that fit consumers’ lifestyles such as smartphone use, value-added services based on their interests and capture important information to gauge future driver risk,” Hassib added.

In terms of what information consumers feel should be used for determining premiums, most opted toward traditional factors such as driving record and number of accidents in the past few years. More than half cited “actual driving data” over the past three months as an acceptable rating factor, according to the study.